There are few investors in the world with a long-term investment track record like Warren Buffett.
He has delivered a compound annual return of around 20% over the decades. It’s completely true that he chose some great businesses to achieve those returns.
However, two additional important points are that he chose to buy at good value and didn’t panic sell during volatile periods. Selling just because the market is volatile is a probably a bad idea.
So, it’s good to look back on some of his pieces of wise advice over the years to help us remain calm today.
Quote 1: Hamburgers
In 2001 Warren Buffett said the following:
“To refer to a personal taste of mine, I’m going to buy hamburgers the rest of my life. When hamburgers go down in price, we sing the ‘Hallelujah Chorus’ in the Buffett household. When hamburgers go up in price, we weep. For most people, it’s the same with everything in life they will be buying — except stocks. When stocks go down and you can get more for your money, people don’t like them anymore.”
Quote 2: Net buyers should be happy about price falls
In his 1997 annual letter he said:
“If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period?
“Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall.
“Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.”
So even though Vanguard Australian Share ETF (ASX: VAS) is down 2.4% today, I think it’s important to remain focused on the long-term.
Lower prices are good for investors who are still investing additional money.
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Motley Fool contributor Tristan Harrison owns shares of Challenger Limited. The Motley Fool Australia owns shares of and has recommended Challenger Limited and MNF Group Limited. The Motley Fool Australia owns shares of Citadel Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.